Property firms were the biggest drag in the market, with an index tracking major developers tumbling 5.1 percent in its worst day since early 2016.

A number of provincial capitals across China have rolled out new measures to further slow home property sales, and bear down on lingering speculators that could destabilise markets ahead of a key Communist Party congress next month.

There were also signs the authorities are stepping up their efforts to crack down on illegal lending to the sector.

Investor sentiment was also undermined by simmering concerns that China’s beefed-up environmental protection could reduce demand, and consequently economic growth.

UBS strategist Gao Ting said that some top-down investors now anticipate a slowdown in China’s GDP growth, and worry about the sustainability of the global economic recovery.

Although China’s supply-side reforms and tighter environmental protection measures have so far been well received by the market, “some investors now worry that these measures have started hurting demand,” Gao wrote in his latest strategy report.

He said stronger environmental protections could force many smaller resource firms to halt production, affecting investment, while surging upstream costs may finally pass through to consumer goods and services, undermining demand.

“If demand is softer than expected in the upcoming peak season, both commodity prices and related stock prices may fall in response.”

An index tracking resource shares in China fell 2 percent.

Most sectors lost ground for the day, while consumer and healthcare firms led the gains, as investors sought shelter in defensive players. (Reporting by Luoyan Liu and John Ruwitch; Editing by Jacqueline Wong)